The Melbourne and Sydney property market will continue to fall to a soft landing before taking off again in three years, data released by QBE Insurance says.

The median house price in the Victorian and New South Wales capitals - the country's two largest property markets - is forecast to fall 2.5 and 1.2 per cent respectively by June 2021, while units will fall 2.1 per cent in Melbourne, and 3.1 per cent in Sydney.

QBE Lenders' Mortgage Insurance chief executive Phil White described the slowdown in property prices as man-made due to the withdrawal of credit from domestic and foreign investors.

He said this was necessary after such aggressive growth between 2012 and 2017.

Sydney house prices soared 84 per cent over that period before falling 7.6 per cent in 2018.

"What we're seeing from house price reductions is exactly what some of our regulators wanted to see and we would concur that it's probably healthy to ensure we have a soft landing in the Sydney and Melbourne markets rather than anything more dramatic," Mr White told AAP.

"The softening will continue for the next year before some flattening out and then the forecast is that by 2021 we'll see a bit of growth coming back into both the Sydney and Melbourne house and unit markets."

The report says the Sydney house prices will fall 4.2 per cent in 2019 and bottom out the year after that.

It will then begin its climb back, with a predicted rise in 2021 by 2.3 per cent.

The Melbourne market is tipped to follow a similar trend.

Houses in all other capital cities are forecast to increase in value, with the strongest growth expected in Adelaide and Brisbane, which are tipped to climb 12.4 and 11.3 per cent respectively.

Mr White predicted a widespread downturn in fortunes for apartment owners, driven by weaker demand from investors and an increased supply of units.

But strong population growth boosted by high overseas migration will limit the drop in prices.

"We anticipate foreign investment will further dampen in coming years owing to a number of factors such as increased approval fees, stamp duty and land tax surcharges," Mr White said.

"As well as tighter capital controls from foreign governments, most notably China, which have impacted how much money they can take out of their country."

The data, commissioned by BIS Oxford Economics, shows Canberra house prices will rise 10.4 per cent over the next three years.

Ratings agency Moody's said, in August, the number of Australians falling behind on their mortgages will rise in the next two years as interest-only loans end and repayments get more expensive.

"When IO (interest-only) loans convert to P&I (principal and interest), borrowers have to make higher monthly repayments, and this 'payment shock' can lead to mortgage delinquencies and makes IO loans riskier than P&I loans," Moody's said.

Mr White acknowledged a minority may experience short-term 'payment shock' but told AAP these particular borrowers won't have a material impact on the property market or economy as a whole.

"People have been tested - they're servicing their interest rates way above what their principle and interest would be," he said.

"We are watching it carefully, but at the moment we're not seeing any systemic issue around that transition."